According to Farm Credit Canada’s annual Farmland Values Report, released earlier this month, the value of farmland in Southern Ontario in 2023 increased 13.3 percent per acre from the previous year.

The report stated the average value was $23,100 per acre in Southern Ontario, which includes Chatham-Kent, Essex, Lambton, Middlesex, and Elgin counties in the FCC’s eight Ontario regions.

The value per acre in Southern Ontario was $20,400 in 2022 and was just $13,600 in 2020.

The report stated that while the majority of areas within the Southern region saw increases, there were limited land sales in certain areas, such as the stretch between Chatham and Sarnia.

Southern Ontario’s 13% increase was the third highest in the province for 2023, trailing Eastern (Ottawa, Cornwall), which saw a 15.5 percent increase, and South West Ontario (Oxford, Perth, Huron) at 13.1%.

Southern Ontario’s $23,100 value per acre trailed South West at $32,700 and Central West (Wentworth, Waterloo, Halton, Peel and York) at $27,900.

For all cultivated farmland in Ontario, the average values increased by 10.7 percent in 2023, following increases of 19.4% in 2022 and 22.2% in 2021.

Meanwhile, the average value of Canadian farmland continued its steady climb in 2023, increasing by 11.5 percent, slightly less than the 12.8 percent increase reported in 2022 but ahead of the 8.3% increase in 2021.

This year’s increase is the second-highest FCC has reported since 2014.

“Farmland prices have continued to increase at a rapid pace over the last couple of years, even when economic conditions suggested the growth should slow,” said J.P. Gervais, FCC’s chief economist. “A limited supply of available farmland combined with a robust demand from farm operations is driving that growth.”

Ontario’s 10.7 percent increase was the fourth highest in Canada, trailing Saskatchewan’s 15.7 percent increase, Quebec’s 13.3 percent increase, and Manitoba’s 11.1 percent increase.

Four provinces had single-digit average increases: Nova Scotia, 7.8 percent; Prince Edward Island, 7.4 percent; Alberta, 6.5 percent; and New Brunswick, 5.6 percent.

British Columbia recorded an average decline of 3.1 percent, but it still had the highest farmland values on average.

“The land market has shown to be very resilient,” Gervais said. “Purchasing land in the year ahead will come with careful consideration of the price and timing.”

“Some operations will prefer to wait and see where land values will settle while others may move more quickly should adjacent land become available, or simply because it fits their strategic business plans,” Gervais said.

The FCC value report stated the number of farmland transactions in 2023 declined slightly relative to 2022 as farm operations exercised more caution toward investment decisions.

“The expectation of weaker farm revenues and elevated borrowing costs and input prices are expected to stretch out this cautious environment for farmland transactions into 2024,” Gervais said.

Gervais said an important part of preparing for inevitable but unpredictable economic changes is creating and updating a risk management plan as shifts in the economy unfold.

“Staying informed on the external factors like commodity prices and interest rates can help producers build in the necessary flexibility in their budgets,” he said.

For the full 2023 FCC FarmlandsValue Report, visit www.fcc-fac.ca

By Michael Bennett, Local Journalism Initiative Reporter

Original Published on Mar 18, 2024 at 12:51

This item reprinted with permission from   The Independent News   Ridgetown, Ontario

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